Based on educated guesses for categorised groups of ships, we expect a large share of international shipping fleets to implement LNG propulsion. First and foremost for newbuild ships.
Here at DNV we are already convinced that the case for LNG as a maritime fuel is a strong one:
- The environmental performance is superior to any other realistic ship propulsion alternative.
- The economic performance will be superior given that oil and natural gasprices develop as analysts expect. (I will save the topic of analysts’ accuracy for a later post)
One of the LNG fuelled ferries already in operation in west coast Norway
The task of predicting the future is always a challenging one. And especially when there is not an existing market, because then you can’t even apply linear projections. So it will boil down to guessing at some level. The key to success in predicting the future, I believe, is to guess at a level where you can make educated guesses rather than shots in the dark. This is why we have dissected the question of how fast LNG will penetrate the maritime fuel market into smaller sub-questions.
First, the whole fleet of existing vessels can be peeled off; some of them will be converted, but most will either install scrubbers or switch to distillate fuels. So the major transition to LNG will take place for newbuilds.
Second, the newbuilds can be categorised in ship types, geographic region of operation, types of trade, etc. For specific ship types operating in specific geographic areas, it becomes easier to make educated guesses.
After spending a lot of time guessing, which can be a difficult process for engineers, all the answers can be summarised up to the top level, where statements like “the majority of ships ordered in 2020 will be LNG fuelled” can be made. Which is exactly what we were interviewed on by Bloomberg recently.
For any guessing, I think we should follow the below principles:
1). Is it safe enough or the technology is already prepared very well?
Currently, several research DEP has done a lot on this issue, but no one has been built. The key issue is DNV has to prove that this concept (from conceptual design, basic design to detail design) is acceptable and safe enough. I think the structure is something but is nothing comparing with the system, which shall be explained more by manufature with good reputations.
2). how about the cost? People always say how much emit has been reduced and how much energy has been saved in 20-30 years. But who cares? Let’s check all the big shipowners, who has owned their ships for more than 15 years?
3). Is there any consideration on the port limit, canal etc? These things would finally affect your concept to be economic or not.
4). how we predict the economy in the next 10 years?
There will be some volunteers in the new technology, but it will take quite long time.
If I have to guess something, the ship would be equiped with some new energy instead of gas in the future.
Frank, thanks for you views on the topic. I’ll try to shed some more light on some of these things:
1. Yes, it is safe. DNV developed class rules along with the first LNG fuelled ship in 2001. Since then we have documented experience through 21 ships now in operation. IMO has also published interim guidelines for gas fuelled ships, which will lead to a IGF code for these ships. So, the concept of LNG as fuel is already proven through extensive operation and rule/regulation development.
2. Costwise, suppliers indicate some 10-15% delta cost for LNG installations. And yes, you are absolutely right you need to own the ship for a certain period of time to repay that. And I also observe that shipowners have a tendency of trading ships quite often.
3. Port and canal limits are not considered. I believe that once proper procedures are in place, the impact on the port operations will be minimal. However, there might be some different safety distances for bunker stations/barges.
4. I don’t try to predict the economy in the next 10 years, I refer to analysts. Then I observe that analysts are consistently wrong.